by Guest » Fri May 04, 2012 05:43 am
I have damaged my neighbor's car while parking mine. The damage is not much, and is in fact less than the deductible on my policy? Is there any other way, so that I don't have to pay the deductible amount?
Posted: Fri May 04, 2012 02:39 pm Post Subject:
Is there any other way, so that I don't have to pay the deductible amount?
If you are asking about the cost to repair the neighbor's vehicle, then your question is wrong. Auto insurance collision deductibles apply to damage to your own vehicle, not what you (or your vehicle) do negligently to someone else's property.
If you damaged the neighbor's vehicle, your insurance will pay the full cost of the repair (assuming the loss is not a "total" one). When it comes to fixing any damage on your vehicle, your insurance will only pay the amount of loss that exceeds your deductible. As it applies to your vehicle, the deductible is inescapable. You don't "pay" it as such, you just don't have that portion of the repairs covered by the insurance company. You would be responsible for that amount of the repairs to your vehicle.
A deductible is the amount of each loss YOU choose to SHARE with the insurance company. In exchange for a higher deductible, the insurance company reduces your premium, because they are not exposed to paying for your small losses (damages at or below the deductible amount).
Posted: Mon May 07, 2012 12:57 pm Post Subject:
Thanks Max for answering my worries. My insurance company is not aware of the damages done yet.. and it was my neighbor's car which I was talking about. I actually was confused about the insurance deductible and how it works.
One other thing I wanted to know was that, what would have been the consequences if it had been my car? I mean since the small losses won't be covered, what will happen to any damage or accident after that? Isn't it sensible enough then to not file the damages?
Posted: Mon May 07, 2012 02:14 pm Post Subject:
since the small losses won't be covered, what will happen to any damage or accident after that?
The purpose of deductibles is to keep the smaller claims for damages away from the insurance company. 40 years ago, when the average price of a new car was less than $3000, it was not uncommon for folks to have $0 deductibles for collision and comprehensive/other than collision coverage. The annual cost of my $50/$100 policy on a 1970 Toyota Corolla with $0 deductibles in CA in 1970 was about $100. (The CA minimum wage from 1968-1974 was $1.65 per hour).
Today, with the average cost of a new vehicle in the $30,000 range, and the IIHS estimates that an SUV vs Car collision will cause somewhere in the neighborhood of $1700 - $2500 in damage to the SUV and $1200 -$4500 to the car (or more depending on the vehicle), and a Car vs SUV collision could increase the damages to each vehicle by up to 50%, it's no wonder that many folks are driving around with $1000 and higher deductibles.
If your damage claim is less than that, you obviously wouldn't submit it to your insurance company for payment, and probably wouldn't even report it to the DMV as required. And if you didn't have the cash to pay for the repairs, you would drive around town in a damaged vehicle (which is also not an uncommon sight these days) until the next collision occurred.
But it also leads to improperly inflated claims when a driver has that subsequent collision and attempts to make a claim for cumulative damage based on the most recent collision. This is one type of insurance fraud, and auto insurance is the #1 source of insurance fraud cases in almost every state.
Isn't it sensible enough then to not file the damages?
All I can say is that if you have a $1000 deductible for collision and your vehicle has $995 in damages caused by your driving, there is no part of the claim that your insurance policy will cover. But you would probably be disinclined to report a loss to your insurer if the damage was $1100, too, for fear that your insurance premium would increase by at least $100.
Your driving history is part of what the insurance company bases your premium on, and they are entitled to know the truth.
How a person chooses to handle their particular situation/losses is between them and the fencepost. I can't tell you not to file a report of an accident with your insurance company when that may be required by the terms of your policy, and I'm certainly not going to tell you not to file a DMV report if the cost of the damage exceeds the minimum threshold ($750 in CA).
Can you drive around town in an unrepaired vehicle? Yes, if it is safe to do so. Can you claim the old damage along with the new when you have the next collision as if all were part of one event? NO.
what would have been the consequences if it had been my car?
Just because other people are committing insurance fraud every day doesn't mean you should be one of them, too. People do stranger things . . . like "enhancing" the damage to raise the cost of the repairs so that their insurance will pay the bill.And then we have persons who insure already damaged vehicles and report soon after obtaining coverage that they were involved in a collision. Some of them use the same vehicles repeatedly with different insurance companies, making insurance fraud their profession.
Until the get caught. For that, the consequences can be five years in prison with Bubba as your spouse, and all the conjugal privileges that go with it.
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